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Mark Grossman


17 September 2004

If your business is considering outsourcing some or all of its Information Technology, whether to a domestic service provider or offshore, you will need some outside help to get this right. It's just too complicated to take this on alone. You don't want the cost of your education to be a failed project.

Internally, you are going to have to amass a team that includes senior level management, your Chief Technology Officer, folks from effected departments, a technology lawyer skilled in doing these deals, and possibly a consultant.

While I know that you will involve a lawyer at some point because these contracts are extremely complex, I would strongly suggest that you involve your lawyer early in the deal. Consultants often discourage early lawyer involvement because they feel that they can negotiate the deal on your behalf. They can't.

Consultants don't have the training or the mindset to delve into your details. While they are good at discussing how the process should work, which is their core competency, they fail to ask the "what-if" questions a good tech lawyer will ask. Further, when clients bring me into the process late, I'm often faced with the vendor's form, which my client's consultant "fixed." It's like amateur hour and now I'm faced with fixing illiterate garbage or starting all over again.

Don't get me wrong. Consultants are usually important because few companies have the in-house expertise to drive the technical parts of the deal. The problem starts only when your consultant wants to stray into driving the negotiation of the business deal and writing the contract.

Now that I've said all that, let's not pretend that a law degree is a degree in negotiating business deals. Most lawyers do it poorly, which explains why lawyers have a reputation as being "deal killers." It's often a well-earned reputation.

Ask your potential lawyer if he's comfortable with leading the negotiations. "Leading" in this context doesn't mean that you give up any decision-making power, but it does mean your lawyer focuses on the negotiating process and will drive it for you. Talk to him about negotiating strategy and how he proposes to drive the deal to its conclusion. Some lawyers are negotiators, but most are technicians in that they will do a competent job of putting your deal down on paper, but that have no real skill in negotiating. You need to be sure that you've hired a power negotiator.

Please be aware that a power negotiator isn't the person in the room who can yell the loudest. It's someone more likely to insure that a good lunch is brought to the table at noon – to help maintain the good mood – than someone who yells a lot. (Not that banging your shoe on the table, a la Khrushchev at the U.N., doesn't have its place.)

Be sure that your agreement includes a meaningful Service Level Agreement (SLA) with objective metrics. Without a good SLA, you may find that your company is at the mercy of accepting whatever it is your outsourcer delivers. If you want some control, it comes in the form of a complex highly negotiated agreement and an SLA with penalties for failure to perform.

Outsourcing is republished from
Mark Grossman
Mark Grossman